Tag Archives | Peter Drucker

Over the years I have read a lot by Peter Drucker on his ideas about leadership and organizational management. I would probably do well to go back and think on what has said again.

With that in mind, I wanted to draw attention back to an entry I wrote about his short essay, Managing Oneself. If you have to choose between them, read Drucker’s piece.

One of the things he says is that people often don’t really know what their strengths and weaknesses really are. The first step one often needs to take is to discover these things for themselves.

As I wrote in my entry a number of years ago,

“Drucker gives a number of interesting examples of how men like Patton, JFK, Eisenhower and Churchill were hampered by situations which emphasized their weaker areas.”

Many tests, especially those administered in schools, measure our skills according to a very narrowly defined set of standards that may not have any relevance to our post-graduate lives.

Knowing that, it really is often incumbent upon ourselves to discover what we are good at, how and in what situations we work best, what our values are and how we can contribute. Managing Oneself strives to teach you how to do just that.

I still carry the article around with me to remind me of many of the points Drucker makes about how to understand what you need to function and thereby provide the same service to those with whom you work.

The Reds don’t provide much information about their structure, though they promise the price will never fall below whatever the season ticket holder pays. They set their base pricing at the start of the season per anticipated demand and start implementing the dynamic pricing two weeks out so it probably pays to buy early.

The Wolverines basically set their anticipated pricing from the start ranging from $65 for the Akron game, $10 less than last year, to $195 for the Notre Dame game, $100 more than last year. (And by the way, that is the lowest price tickets. Their top tier tickets for Notre Dame are $500.)

The piece on The Drucker Exchange says the mistake companies often make is to ask what customers value. This is aptly illustrated by the secondary market for those Wolverines games. You can get those $65 Akron tickets for $35 on the secondary market, but those $195 Notre Dame tickets seem to be going for about $319 already. (Single tickets go on sale tomorrow, 8/1)

Peter Drucker lamented how few companies recognize the importance of simply asking themselves what their customers value. “It may be the most important question,” Drucker noted in Management: Tasks, Responsibilities, Practices. “Yet is the one least often asked.”

One reason for this is that companies think they already know. “Value is what they, in their business, define as quality,” Drucker wrote. “But this is almost always the wrong definition.” For example, for a teenage girl, “value in a shoe is high fashion,” while durability and price matter little.

“Another reason why the question ‘What is value to the customer?’ is rarely asked is that the economists think they know the answer: Value is price,” Drucker added. “This is misleading, if not actually the wrong answer.”

For instance, electrical contractors, while famously price-conscious, may prefer one of the most expensive fuse boxes on the market. “To the contractor this line is actually low-priced because it is engineered to be installed fast and by relatively unskilled labor,” he explained.

The ultimate lesson is simple but not easy: “The customer never buys a product,” Drucker wrote. “The customer buys value.”

(My emphasis on that last sentence on the Drucker citation)

There are many intangibles that factor into what people value. Will the Notre Dame game be three times better than Akron? Possibly. By game day in September, there is a fair chance the primary market tickets to the Notre Dame game will be four or five times more expensive than Akron, if not more.

There will be a point where the quality of the actual Notre Dame gameplay can’t be better than that of Akron in proportion to the difference in ticket price.

What people are willing to pay so much more for is the experience of tailgating and attending a potentially great game steeping in the palpable excitement surrounding the long rivalry between the two teams with thousands of others.

I have resistance to dynamic pricing for a number of reasons, many of which have to do with the relationship I feel we are trying to cultivate with our audiences.

The question is, do people really recognize and value that we are making the effort? Is it all pretty much one-sided? Many people don’t really discern between profit and non-profits organizations when making their entertainment decisions.

Are non-profits basically putting themselves at a disadvantage by not using dynamic pricing for shows that clearly will sell out months before the performance date based on a devotion to an audience that has no idea the organization has decided to suffer for their benefit?

There is a need to keep prices low to provide affordable access. If 900 people clearly value attending a performance that they will commit at $25 a ticket between one and three months before the show, do you really owe it to the last 100 people to maintain the $25 rate until they get around to buying tickets?

Or do you owe it to your long suffering staff to try to increase the revenue stream so you can pay them $12/hour instead of $8 by using dynamic pricing?

We aren’t sure about the investment of the community in your organization, but we can be more certain about the investment of your staff.

I am still a little uncertain about dynamic pricing. The issues aren’t as clear as I present them here. However, one issue I don’t generally see people mention in the dynamic pricing conversation is that by not using it you are potentially punishing your staff in the service of an ideal the community may not be aware of much less value.

If customers show they willing to place a higher value on a product, should non-profits acknowledge that by placing a commensurately higher price on it?

The annual program review is a process we go through at the college both to provide evidence for our accreditation and to measure the general effectiveness of the programs in order meet organizational goals. This process helps the school identify “gatekeeper courses.”

Some colleges and universities use gatekeeper courses to weed students out of certain degree programs by making it very difficult to pass.

For our purposes, the designation is used to indicate courses possessing some characteristic which makes it very difficult for students to acquire basic skills. Make no mistake, the professors will bridle at any suggestion that the standards be lowered in any manner.

Often the solution lies in things like re-ordering the sequence in which concepts are introduced so that the class builds knowledge toward a complex concept in a different manner or perhaps providing hands on demonstration of the complex concept. There are many strategies one can use.

In the arts we talk about very much the same thing when we speak of removing barriers to entry for audiences. We look for alternative ways to communicate, allow people to purchase tickets, find parking, etc–anything that facilitates the decision to attend and makes the experience of doing so more pleasant.

There are many aspects of the process an arts organization can’t and won’t compromise, but there are alternatives the organization can pursue or implement. For example, people may have to pay for parking, but the performing arts center can arrange to paint a distinctive logo on the columns of the municipal parking garage as a signal to patrons the best side of the building to park reach the lobby.

During our preparations for the accreditation site visit, I realized there are many aspects of an organization’s operation that can constitute a “gatekeeper” preventing full participation of all the groups you hope to serve and even hamper the effectiveness of the organization itself.

The organization may pride itself on its accessibility to the public but there may be portions of the art class registration process which you see as helping you collect data for your grants which cause segments of the community you are eager to serve to opt out of participation.

You may view the procurement process you have instituted as central to your attempt to control spending but your staff may see it so onerous it constitutes a disincentive to suggest and develop new programs and as a result, your organization is viewed as staid and unresponsive to changing times.

I have talked many times about marketing being the responsibility of everyone in the organization and that everyone needs to feel like what they do is contributing to the success of the organization and its mission.

But I think it is very easy for departments not in direct contact with those identified as the prime constituency -performers, students, audience members, gift shop customers, etc to feel divorced from the mission.

Human resources may say “we hire the people that make our audiences happy” but sees their purpose as making sure no one exposes the organization to any sort of liability, causing employees to be perpetually anxious.

The business office may say “we help acquire the resources to create the stuff of which dreams are made…” but view their mandate as not allowing the idealistic artistic staff to spend too much money.

Just like with the gatekeeper courses, no one would advocate that staff not be fully trained about sexual harassment and limits of labor laws or that purchasing practices not be properly documented and monitored. However, it is worthwhile to evaluate what parts of your practice are impeding the pursuit of the mission.

Can the material in the employee training program be communicated and reinforced in a different manner than a video at orientation and dire lectures on sexual harassment scenarios? If people are having a hard time remembering purchasing subcodes, is there a better way to organize and list the codes? Or maybe the codes should be an intuitive alphanumeric sequence instead of an incomprehensible series of numbers?

Most importantly is how that department defines their relationship to the overall mission. A change in philosophy will lead to the type of changes I mention. I read an example of this, I think it was in Peter Drucker’s Managing the Nonprofit Organization, about two state social service offices. One got much higher satisfaction ratings than the other because it started from a place where it saw itself as helping people access services while the other saw its role as denying services people weren’t entitled to.

Even if the first office had a lower standard for awarding benefits to clients than the second, but I don’t think an organization has to necessarily compromise the rigor of its standards to engender a sense of satisfaction from others. My choice of the phrase “started from a place…” was intentional.

The context from which you start reframes the whole experience for both the employee and customer even if the final answer is “No.” It isn’t that everyone feels happier because the interaction started on a positive note. Rather, decisions were made long before that customer arrived that effected changes to the physical environment and procedures the office felt were necessary to meeting its perceived mission.

Visitors to both offices might have to fill out Form 46B, but the visitor to the former one might understand the necessity and feel generally optimistic about the outcome, while a visitor to the latter may perceive it as yet another test of their worthiness based on capricious standards.

I have strayed a little bit back toward customer service with this example. But I really want to advocate for looking inward at the company policies and procedures that might be acting as gatekeepers and making employees jobs difficult.

I think arts organizations are generally cognizant of the importance of providing good customer service, even if they aren’t doing it well. Internal evaluation doesn’t happen as frequently and admittedly the true source of problems can be difficult to identify. In the classroom, test scores give a pretty good indication that something is wrong.

It is harder to recognize that inefficient delays in the production department can be solved by providing staff with a company credit card with daily spending limits–a move that empowers the technical staff to acquire minor resources so they can continue working while assuaging the business office’s fears of uncontrollable cost overruns.

About the Author

When I was a teenager if anyone had told me that I would be excited to share information about contract law, marketing, human resources, grant writing and the philosophy behind ticket pricing, I would have laughed...and laughed. But there is such a dearth of this information applicable to the needs of non-profit arts organizations that I do get excited when I see the opportunity to discuss these topics....read more